Principles of Marketing

Seventeenth Edition

Chapter 2

Strategic Planning

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Chapter Outline:

2.1 Steps in Strategic Planning

2.1.1 BCG Growth – Share Matrix

2.1.2 Product/Market Expansion Grid

Managing the Marketing Effort.

Company-Wide Strategic Planning (1 of 3)
Strategic planning
 is the process of developing and maintaining a strategic fit between
the organization’s goals and capabilities, and its changing marketing
opportunities.
 Sets the stage for the rest of planning in the firm
 Annual plans and long range plans – deals with current businesses and
sustainability
 Strategic plans :
 adapting the firm to take advantage of opportunities in the
constantly changing environment
 Start with setting overall purpose and mission

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Company-Wide Strategic Planning

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Steps in Strategic Planning
1. Defining the company mission

The mission statement

 is the organization’s purpose; what it
wants to accomplish in the larger
environment.
 Guides people in the organization

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Steps in Strategic Planning
1. Defining the company mission

To provide universal banking services as a high

performing, institutionalised and integrated company
located in ASEAN and key markets beyond, and to
champion the acceleration of ASEAN integration and the
region’s links to the rest of the world.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

 Our vision
 To be the largest low cost airline in Asia and serving the 3 billion
people who are currently underserved with poor connectivity and
high fares.
 Our mission
 To be the best company to work for whereby employees are
treated as part of a big family
 Create a globally recognized ASEAN brand
 To attain the lowest cost so that everyone can fly with AirAsia
 Maintain the highest quality product, embracing technology to
reduce cost and enhance service levels

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Steps in Strategic Planning
2. Setting Company Objectives and Goals
 The company needs to turn its mission into detailed supporting objectives for
each level of management. Each manager should have objectives and be
responsible for reaching them.

 The company can tie a diverse product portfolio together under a mission.

 This broad mission leads to a hierarchy of objectives, including business

objectives and marketing objectives such as to build profitable customer
relationships by developing superior products.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Steps in Strategic Planning
2. Setting Company Objectives and Goals
• Business objectives –
• Business goals and objectives are part of the planning process. They are
describe what a company expects to accomplish throughout the year.
• Examples, Profitability. ... Productivity. ... Customer Service. ... Employee
Retention. ... Core Values. ... Growth. ... Maintain Financing. ... Change
Management
• Marketing objectives –
• The group of goals set by a business when promoting its products or
services to potential consumers that should be achieved within a given
time frame.
• Examples, Increase sales … Improve Product Awareness … Establish
Yourself in the Industry … Brand Management …

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Steps in Strategic Planning
3. Designing The Business Portfolio

The business portfolio

 is the collection
of businesses and products that make
up the company.
 E.g. :
 Sime Darby (plantation, property, industrial
equipment, motors and logistics)

 The best business portfolio is the one that best fits

the company’s strengths and weaknesses to
opportunities in the environment

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Steps in Strategic Planning
3. Designing The Business Portfolio

Portfolio analysis
 is a major activity in strategic planning whereby
management evaluates the products and businesses that
make up the company.
 Business portfolio planning involves two steps:
 the company must analyze its current business portfolio and
determine which businesses should receive more, less, or no
investment. (BCG Matrix)
 it must shape the future portfolio by developing strategies for
growth and downsizing (Product/Market Expansion Grid)
 Strategic business units can be a
 Company division
 Product line within a division
 Single product or brand

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Steps in Strategic Planning
3. Designing The Business Portfolio
Analyzing The Current Business Portfolio

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Steps in Strategic Planning
3. Designing The Business Portfolio
Analyzing The Current Business Portfolio
The Boston Consulting Group (BCG) Approach

 The best-known portfolio-planning method.

 The growth-share matrix defines four types of SBUs.

• Stars are high-growth, high-share businesses or products requiring heavy investment to

finance rapid growth. They will eventually turn into cash cows.
• Cash cows are low-growth, high-share businesses or products that are established and
successful SBUs requiring less investment to maintain market share.
• Question marks are low-share business units in high-growth markets requiring a lot of
cash to hold their share.
• Dogs are low-growth, low-share businesses and products that may generate enough
cash to maintain themselves but do not promise to be large sources of cash.
 Steps in Strategic Planning
3. Designing The Business Portfolio
Analyzing The Current Business Portfolio
Steps in Strategic Planning
3. Designing The Business Portfolio
Problems with Matrix Approaches

• Difficulty in defining SBUs and measuring market

share and growth
• Time consuming
• Expensive
• Focus on current businesses, not future planning

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Steps in Strategic Planning
Developing Strategies for Growth and Downsizing
3. Designing The Business Portfolio

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Steps in Strategic Planning
3. Designing The Business Portfolio
Product Expansion Grid

 Product/market expansion grid is a tool for identifying company growth opportunities

through:
 market penetration,
 market development,
 product development, or
 diversification

 Marketing needs to identify, evaluate, and select market opportunities and establish
strategies for capturing them.
 One useful device for identifying growth opportunities is the product/market
expansion grid, Figure 2.3.
Steps in Strategic Planning
3. Designing The Business Portfolio
Product Expansion Grid
 Market penetration
 involves making more sales to current customers without changing its
original product such as by adding new stores in current market areas to
make it easier for customers to visit.

 Market development:
 involves identifying and developing new markets for its current products.
 For instance, managers could review new demographic markets. Perhaps
new groups—such as seniors—could be encouraged. Managers could
consider new geographic markets in U.S. markets and in non-U.S. markets,
especially Asia.
 Steps in Strategic Planning
3. Designing The Business Portfolio
Product Expansion Grid
 Product development
 involves offering modified or new products to current markets such as by moving into new
product categories.

 Diversification
 involves starting up or buying businesses beyond its current products and markets.
 For example, the company could acquire a company that operates in different market
segments with a different product mix.
Steps in Strategic Planning
3. Designing The Business Portfolio
Product Expansion Grid
Existing Products New Product

Existing MARKET PENETRATION PRODUCT

Markets DEVELOPMENT
e.g. F&N Carbonated
Drinks e.G Fruit Tree and
Zesta

MARKET DEVELOPMENT DIVERSIFICATION

e.g. Seasons and 100 e.g Diversify in
Plus is targeted to all property
active lifestyle development and
New consumers Hospitality
Markets
Steps in Strategic Planning
3. Designing The Business Portfolio

Developing Strategies for Growth and Downsizing

Downsizing is when a company must prune, harvest, or divest
businesses that are unprofitable or that no longer fit the strategy.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Steps in Strategic Planning
4. Planning Marketing: Partnering to Build Customer
Relationships (1 of 3)
Marketing alone can’t create superior customer value.
Under the company-wide strategic plan, marketers must
work closely with other departments to form an effective
internal company value chain.

Value chain is a series of departments that carry out

value creating activities to design, produce, market,
deliver, and support a firm’s products.
Steps in Strategic Planning
4. Planning Marketing: Partnering to Build Customer Relationships (1 of 3)

Partnering with Other Company Departments

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Steps in Strategic Planning
4. Planning Marketing: Partnering to Build Customer
Relationships (1 of 3)

Partnering with Others in the Marketing System

Value delivery network is made up of the company, suppliers,
distributors, and ultimately customers who partner with each other to
improve performance of the entire system.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Marketing Strategy and the Marketing
Mix

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Marketing Strategy and the Marketing Mix
Customer Value-Driven Marketing Strategy

Marketing strategy is the marketing logic by which the company

hopes to create customer value and achieve profitable customer
relationships.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Marketing Strategy and the Marketing Mix
Customer Value-Driven Marketing Strategy

Market segmentation is the division of a market into distinct groups of

buyers who have different needs, characteristics, or behaviors and
who might require separate products or marketing mixes.

Market segment is a group of consumers who respond in a similar way

to a given set of marketing efforts.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Marketing Strategy and the Marketing Mix
Customer Value-Driven Marketing Strategy

Market targeting is the process of evaluating each market segment’s

attractiveness and selecting one or more segments to enter.
Market positioning is the arranging for a product to occupy a clear,
distinctive, and desirable place relative to competing products in the
minds of target consumers.
Differentiation begins the positioning process.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Marketing Strategy and the Marketing
Mix
Customer Value-Driven Marketing Strategy

Positioning: The L’Oréal group serves major

segments of the beauty market, and within
each segment it caters to many sub segments.
L’Oréal targets the larger segments through its
major divisions; further within these major
divisions, L’Oréal markets various brands that
cater to customers of different ages, incomes,
and lifestyles.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Marketing Strategy and the Marketing Mix
Developing an Integrated Marketing Mix

Marketing mix is the set of controllable, tactical marketing tools—

product, price, place, and promotion—that the firm blends to
produce the response it wants in the target market.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Marketing Strategy and the Marketing Mix

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Managing the Marketing Effort
Figure 2.6 Analysis, Planning, Implementation, and Control

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Managing the Marketing Effort

Figure 2.7 Marketing Analysis: SWOT Analysis

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Managing the Marketing Effort
Marketing Implementation

• Turning marketing strategies and plans into marketing actions to

accomplish strategic marketing objectives
• Addresses who, where, when, and how

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Measuring and Managing Return on Marketing Investment

Return on Marketing Investment (Marketing ROI)

• Net return from a marketing investment divided by the costs of
the marketing investment
• Measurement of the profits generated by investments in
marketing activities

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Measuring and Managing Return on Marketing Investment

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.